Sourcing the cheapest deal possible has been part of the Aussie mentality for years. Some would even go so far as to call it a national sport, and it does not discriminate: it spans everything from televisions to cars to furniture.
While this mindset isn’t necessarily something of which to be ashamed, one has to consider the consequences of placing so much emphasis on price. This is particularly true when it comes to finished jewellery, gemstones and diamonds.
It’s widely accepted that retailers can find the lowest prices if they head overseas. I don’t deny this. In fact, more often than not, it’s true but the question is, “At what cost?” Sourcing product from overseas has an impact on quality, service, the local economy and more.
I could go on but I’m sure you get the idea.
There are many reasons why local goods often come with a high price tag, not least of which is the fact that the buying criteria is completely different when dealing with local and international suppliers. When a retailer phones me asking for a G/H, SI 10-point diamond, I have to take into consideration that the order is for one stone or a couple at most, which will inevitably have to be matching, and that the stone will only be taken on appraisal and I will not receive payment for 30 to 60 days.
On the other hand, that same retailer will go overseas and order three or five carats of 10-pointers – not matching, mind you. There will be eight to 12-pointers in the parcel, stones they would normally not accept, and the goods will be paid straight away.
How can I compete against that? They’re totally different goalposts. But what if I told you that this doesn’t have to be the case? What if I said that I, along with my fellow Australian wholesalers, could compete? We could match the price or at least get very, very close.
How, you ask? The answer comes down to ensuring that we operate under the same rules. We can create a level playing field by applying the same buying principles regardless of location.
I’m going to let you in on a little secret: if retailers want cheaper goods, chances are we can make them cheaper. In the Australian diamond industry, we generally say there are about 15 different diamond grades of smalls. But did you know there are actually more than 100?
The problem is that it’s not feasible for dealers to bring so many slight variations into the local market because the demand isn’t there. I think a lot of retailers would be surprised to learn how price-competitive local suppliers could be with their goods if similar trading conditions to those in overseas markets were applied – make an order for five-carats and pay for the goods immediately.
Jewellers also forget to factor in the hidden costs of sourcing from overseas. While local goods can easily be returned to the supplier, it’s virtually impossible to send stones back to somewhere like India. Of course, certain wholesalers might offer some sort of return policy but the parcel will need to be sent back via FedEx. Got insurance for FedEx? Possibly not, which means taking out additional insurance. The costs of getting the goods back to India might be $1,000 dollars. If it’s a $10,000 dollar parcel then it’s not worthwhile even sending back because you’ve just lost another 10 per cent.
We haven’t even touched on the costs involved in being away from the business. One might return from a buying trip and think, “Yeah, I bagged some good deals” but it might be a different story when that calculator comes out. One week away could cost $7,500 including wages for the owner and manager, airfares and accommodation.
Consider this the new Aussie mentality: how much was spent in order to save $7,500?
Don’t get me wrong, it’s important to attend international trade fairs. We all need to keep abreast of what’s happing in our wider industry but why not talk to Australian wholesalers beforehand? Use similar buying criteria to that of international suppliers and I’m sure you will be pleasantly surprised by the outcome.
Name: Brett Bolton
Business: Bolton Gems
Position: director
Location: Brisbane, Queensland
Years in the industry: 20